Nelson v. Justice
| Decision Date | 09 March 2021 |
| Docket Number | No. E2020-00287-COA-R3-CV,E2020-00287-COA-R3-CV |
| Parties | KIM RENAE NELSON v. LORING E. JUSTICE |
| Court | Tennessee Court of Appeals |
Appeal from the Juvenile Court for Roane County
This appeal concerns the trial court's entry of judgment on an appeal bond for attorney fees. We affirm the trial court in all respects.
Linn Guerrero, Knoxville, Tennessee, for the appellant, Loring E. Justice.
Cecilia S. Peterson and David L. Valone, Knoxville, Tennessee, for the appellee, Kim Renae Nelson.
Jeffrey S. Price and J. Caralisa Connell, Nashville, Tennessee, for the appellee, The Guarantee Company of North America, USA.
OPINIONKim Renae Nelson and Loring E. Justice are the parents of a child born in February of 2005. The parties have been litigating matters concerning the child since before his birth. Ms. Nelson is an attorney. Mr. Justice has been disbarred. By order entered April 11, 2017, the trial court awarded Ms. Nelson $376,638.90 in attorney fees ("the underlying judgment"). Mr. Justice moved the trial court for a partial stay of execution on the underlying judgment, pending the outcome of his appeal. Following a hearing, the trial court granted Mr. Justice's motion "conditioned upon [Mr. Justice] obtaining an appeal surety bond through a licensed, professional bonding company in the amount of $450,000.00 to secure payment of the judgment in full, interest, damages for delay, and costs on appeal."
As required, Mr. Justice secured the appeal bond. Specifically, on May 11, 2017, The Guarantee Company of North America USA ("the Surety") issued appeal bond number 15144284 on behalf of Mr. Justice, as principal, in the amount of $450,000.00. As a condition of the Surety's issuance of the bond, Mr. Justice executed an "all purpose bond application" and indemnity agreement on May 10, 2017. The indemnity agreement obligated Mr. Justice to, among other things, pay premiums on the bond, and "[t]o completely indemnify the [Surety] from and against any liability, loss, cost, attorney's fees, and expenses of whatsoever kind or nature, including the enforcement of [the indemnity agreement], which the [Surety] shall at any time sustain or incur by reason or in consequence of having executed or procured the execution of the bond." The indemnity agreement also states that Mr. Justice is liable for all amounts paid by the Surety in good faith under the belief that it was liable or for payments that were necessary to protect the Surety's rights. Furthermore, the Surety's vouchers or other evidence of payment are considered conclusive evidence of the fact and extent of Mr. Justice's liability under the terms of the indemnity agreement.
Mr. Justice pursued his appeal, but was not successful. A panel of this court upheld the trial court's rulings and affirmed the underlying judgment in all respects. Nelson v. Justice, No. E2017-00895-COA-R3-CV, 2019 WL 337040 (Tenn. Ct. App. Jan. 25, 2019), perm. app. denied (Tenn. Sep. 18, 2019).1
Ms. Nelson then sought payment of the underlying judgment plus post-judgment interest from the Surety on October 1, 2019, prompting the Surety to demand Mr. Justice to satisfy Ms. Nelson's claim on the bond or obtain an order discharging the bond. When Mr. Justice declined payment, did not otherwise satisfy the underlying judgment, and did not obtain an order discharging the bond, the Surety filed a motion in the trial court to determine its obligations. In its motion, the Surety stated, "if this Court deems that [the Surety] is obligated to make payment under the Bond, [the Surety] moves for a judgment against Justice pursuant to Tenn. Code Ann. § 25-3-122 and Justice's contractual obligations." The Surety noted that "Justice may have additional defenses to assert against [the Surety's] payment to Nelson under the Bond," and invited Mr. Justice to "clarify or further articulate [his] position and objections." The Surety also moved the court for an order discharging its obligations under the bond. Likewise, on November 20, 2019, Ms. Nelson filed a motion seeking payment upon the bond.
On January 17, 2020, Mr. Justice filed a substantive "Response to Motions Regarding Surety Bond and Constitutional Challenge to Tenn. Code Ann. § 25-3-122," in which he raised a number of alleged defenses and challenges to the bond's validity, Ms. Nelson's payment under the bond, and the Surety's potential judgment against him, as principal, pursuant to the statute.
The trial court held a hearing on January 23, 2020, in which counsel for Ms. Nelson, counsel for Mr. Justice, and counsel for the Surety participated and fully argued their positions.2 By order entered February 13, 2020, the trial court entered a judgment upon the appeal bond, ordering the Surety to submit payment to Ms. Nelson in the amount of $436,194.92.3 Upon this payment to Ms. Nelson, the Surety would be released from its obligations under the bond. The trial court found that "[p]ursuant to Tenn. Code Ann. 25-3-122, [the Surety] is entitled to a judgment against [Mr. Justice] in the amount of $436,194.92 plus $2,724.00 in attorneys' fees." Accordingly, the trial court entered a judgment against Mr. Justice in favor of the Surety for $438,918.92 upon which execution could issue.
The Surety deposited the payment owed to Ms. Nelson in the court's registry while Mr. Justice's motion to alter or amend was pending. On February 20, 2020, the trial court denied Mr. Justice's motion, finding that he had presented no new arguments, that the arguments presented were meritless, and that he had failed "to cite legal authority to support any and all propositions raised in [his] brief." The trial court ordered the Clerk to disburse the funds to Ms. Nelson. Mr. Justice appealed. Requests for a stay pending the outcome of this appeal have been denied by the trial court and by this court.
Mr. Justice raises a number of issues for our review which we restate and reorder as follows: (1) Whether Ms. Nelson nullified her right to claim on the appeal bond by violating the stay order; (2) Whether there was adequate consideration for the appeal bond; (3) Whether the appeal bond was invalidated because it was not formally approved by the trial court; (4) Whether enforcement of the underlying judgment resulted in manifest injustice; (5) Whether Mr. Justice was afforded due process; (6) Whether Tennessee Code Annotated section 25-3-122 is superseded by Tennessee Rule of Civil Procedure 65A; (7) Whether Tennessee Code Annotated section 25-3-122 isunconstitutional as applied; (8) Whether Tennessee Code Annotated section 25-3-122 is preempted by 28 U.S.C. §1332; and (9) Whether Tennessee Code Annotated section 25-3-122 violates the federal interpleader statute, 28 U.S.C. § 1335.
Mr. Justice also states a "catch all" issue of "whether the trial court erred in awarding judgment, in whole or in part, to [Ms. Nelson] against [the Surety]." This issue is duplicative of the more specific issues stated above and does not correspond to a section in Mr. Justice's argument, so we will not specifically address it.
We review a non-jury case de novo upon the record, with a presumption of correctness as to the findings of fact unless the preponderance of the evidence is otherwise. See Tenn. R. App. P. 13(d); Bowden v. Ward, 27 S.W.3d 913, 916 (Tenn. 2000). This presumption of correctness applies only to findings of fact and not to conclusions of law. Campbell v. Florida Steel Corp., 919 S.W.2d 26, 35 (Tenn. 1996). The trial court's conclusions of law are subject to a de novo review with no presumption of correctness. Blackburn v. Blackburn, 270 S.W.3d 42, 47 (Tenn. 2008); Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 91 (Tenn. 1993). "Because issues of constitutionality and statutory construction are questions of law, we review them de novo with no presumption of correctness accorded to the legal conclusions of the courts below." Willeford v. Klepper, 597 S.W.3d 454, 464 (Tenn. 2020) (citing Waters v. Farr, 291 S.W.3d 873, 882 (Tenn. 2009)). Interpretation of the Tennessee Rules of Civil Procedure is a question of law, which we review de novo with no presumption of correctness. Lacy v. Cox, 152 S.W.3d 480, 483 (Tenn. 2004).
(1)
First, Mr. Justice argues that Ms. Nelson's conduct during the pendency of the appeal disqualified her from payment upon the appeal bond. He explains that Ms. Nelson obtained a judgment lien on his property during the pendency of the appeal and refused to remove it. In Mr. Justice's view, Ms. Nelson's actions violated the trial court's order to partially stay execution on the underlying judgment, should be characterized as contempt of court, and "should have disqualified [Ms. Nelson] from making a claim on the bond."
The trial court found that the stay order "was never violated in the first place" because:
[f]iling a copy of the Court judgment in the Knox County Register of Deeds does not violate the Court's Stay Order, nor does it amount to contempt of court. However, even if the filing was contemptuous, such conduct would not void the bond. There is no rational basis in law or fact to support the argument that filing a judgment lien voids or negates an appeal[] bond.
We agree with the trial court's reasoning. On appeal, Mr. Justice repeatedly references Ms. Nelson's allegedly "contemptuous acts" without raising as an issue the trial court's denial of his motion for contempt during the hearing. Our Supreme Court has held that "an issue may be deemed waived when it is argued in the brief but is not designated as an issue in accordance with Tenn. R. App. P. 27(a)(4)." Hodge v. Craig, 382 S.W.3d 325, 335 (Tenn. 2012). Nor does Mr. Justice reference with proper...
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